Can I still use the $2-a-day flat rate?

No. The flat-rate method covered 2020, 2021 and 2022 only. From 2023, employees use the detailed method, which needs a signed Form T2200 from the employer, receipts, and Form T777.

What does an employee need from the employer?

A completed and signed Form T2200, Declaration of Conditions of Employment, confirming you were required to work from home. You must also have worked from home more than 50% of the time for at least four weeks in a row. Keep the form. You do not file it, but the CRA can ask for it.

Can an employee deduct mortgage interest?

No. No employee, salaried or commission, can deduct mortgage interest, mortgage principal or capital cost allowance.

Which line does the claim go on?

Employees: Form T777, carried to line 22900 (other employment expenses). Self-employed: line 9945 (business-use-of-home expenses) on Form T2125, which flows into net business income.

My home office is also the guest room. Can I claim it?

Yes, if it is your principal place of business, but a shared room must be prorated for the hours it is used for work. A room used mostly for personal things gives a small claim. Employees prorate the same way.

Should a self-employed person claim capital cost allowance on the house?

Usually not. CCA on the business part of your home means that part loses the principal residence exemption when you sell, and any CCA claimed can be recaptured as income. The CRA's T2125 guidance flags this.

What if the claim is bigger than my income?

An employee's claim cannot exceed the employment income it relates to. The unused part carries forward to a later year with the same employer. A self-employed claim cannot create or increase a business loss. The unused part carries forward to next year's calculation.

Home Office Expenses in Canada (2026)

This guide is part of Tax-saving strategies for Canadians (2026).

Who this is for

Two groups, two rulebooks. Employees whose employer requires them to work from home need Form T2200 and claim on Form T777. Self-employed people, meaning sole proprietors and partners, claim on Form T2125 under subsection 18(12) of the Income Tax Act. If you own a corporation, you are its employee and follow the employee rules.

How it works

The claim is a share of the home’s running costs. The share is the workspace area divided by the total finished area of the home. If the space is also used for personal things, it is prorated again for the hours you work there.

Employees (detailed method only). You need a signed Form T2200 from your employer, and you must have worked from home more than 50% of the time for at least four weeks in a row. A salaried employee can deduct the workspace share of electricity, heat, water, rent, maintenance and home internet. A commission employee can add home insurance and property taxes. No employee can deduct mortgage interest, mortgage principal or capital cost allowance. The claim goes on Form T777 to line 22900 and cannot exceed the employment income it relates to. The unused part carries forward.

Self-employed (Form T2125, line 9945). The space must be your principal place of business, or used only for the business and regularly to meet clients, customers or patients (Folio S4-F2-C2). You deduct the business share of rent, mortgage interest, property taxes, home insurance, utilities and maintenance. The deduction cannot create or increase a business loss. Any excess carries forward.

Worked example: a 150 sq ft office in a 1,500 sq ft home (Ontario, 2026)

The workspace is 10% of the home. Annual costs: mortgage interest $18,000, property tax $6,000, utilities and internet $4,800, home insurance $1,800, maintenance $5,400. Tax saved uses the 2026 federal and Ontario brackets in our data files.

Claimant	Eligible costs	Claim (10%)	Income before the claim	Tax saved
Self-employed, net business income	$36,000 (all five)	$3,600	$90,000	$1,067 (29.65%)
Salaried employee	$10,200 (utilities, internet, maintenance)	$1,020	$75,000	$302 (29.65%)
Commission employee	$18,000 (adds insurance and property tax)	$1,800	$75,000	$565 (31.41%)

The self-employed claim also lowers net business income, which cuts CPP when income is below the $74,600 year’s maximum pensionable earnings for 2026. Here income stays above it, so CPP is unchanged.

The rules that trip people up

No T2200, no claim. The CRA reviews employee claims and can ask for the signed form.
Mortgage interest is for the self-employed only. It is the most common error on employee returns.
Shared rooms. A kitchen table used for eight working hours a day gets a time proration on top of the area share. A room used only for work does not.
Reasonableness. A laptop on the couch is not exclusive use under subsection 18(12).
Quebec. Quebec employees also need form TP-64.3 from the employer for the provincial return, on top of the federal T2200. Check the Revenu Québec page for the current version.

What to do next

Enter your home, workspace and costs in the home-office deduction calculator to get the claim and the tax it saves. The self-employed tax calculator shows what the deduction saves in tax and CPP. Employees can enter the claim as a deduction in the income tax estimator. More strategies: Tax-saving strategies for Canadians (2026).

Questions people ask

Can I still use the $2-a-day flat rate?: No. The flat-rate method covered 2020, 2021 and 2022 only. From 2023, employees use the detailed method, which needs a signed Form T2200 from the employer, receipts, and Form T777.
What does an employee need from the employer?: A completed and signed Form T2200, Declaration of Conditions of Employment, confirming you were required to work from home. You must also have worked from home more than 50% of the time for at least four weeks in a row. Keep the form. You do not file it, but the CRA can ask for it.
Can an employee deduct mortgage interest?: No. No employee, salaried or commission, can deduct mortgage interest, mortgage principal or capital cost allowance.
Which line does the claim go on?: Employees: Form T777, carried to line 22900 (other employment expenses). Self-employed: line 9945 (business-use-of-home expenses) on Form T2125, which flows into net business income.
My home office is also the guest room. Can I claim it?: Yes, if it is your principal place of business, but a shared room must be prorated for the hours it is used for work. A room used mostly for personal things gives a small claim. Employees prorate the same way.
Should a self-employed person claim capital cost allowance on the house?: Usually not. CCA on the business part of your home means that part loses the principal residence exemption when you sell, and any CCA claimed can be recaptured as income. The CRA's T2125 guidance flags this.
What if the claim is bigger than my income?: An employee's claim cannot exceed the employment income it relates to. The unused part carries forward to a later year with the same employer. A self-employed claim cannot create or increase a business loss. The unused part carries forward to next year's calculation.

Sources

Every figure in this guide comes from one of these primary sources, checked on September 11, 2026.